IEA’s golden rule: Shale gas companies need license to drill

The International Energy Agency (IEA) has unveiled a ‘golden’ rulebook for the extraction of unconventional gases such as shale, which it says is needed to give them a 'social license to operate'.

The checklist includes more regulation, transparency, investment, environmental protection, and a switch to best practices.

“If this new industry is to prosper, it needs to earn and maintain its social license to operate,” said the IEA chief economist Fatih Birol, the report’s chief author. “This comes with a financial cost, but in our estimation the additional costs are likely to be limited.”

According to the IEA’s long-awaited report - ‘Golden rules for the Golden Age of Gas’ - applying their rulebook “could increase the overall financial cost of development [for] a typical shale-gas well by an estimated 7%.”

But Antoine Simon, an extractive industries campaigner for Friends of the Earth, an environmental group, was sceptical that such funding would arrive in time to meet Europe’s climate objectives.

“It will take a long time and an enormous amount of investment that would consequently not be put into renewables and energy efficiency that could reduce emissions now,” he told EurActiv.

There was “nothing new” in the report’s executive summary, and the IEA appeared to be retreating from previous positions favouring renewables, Simon argued.

Underlining public concerns is the problem that scientists say methane is between 20%-100% more potent than carbon dioxide as a greenhouse gas in the short-term.

One study by Cornell University last year found that as a result, shale’s climate impact was “worse than coal”.

However, if companies used a technology known as “green completion” to capture the “fugitive” methane leaks that fracking causes, the climate impact of shale could be minimised, according to the Scottish Widows report.

‘Golden age of Gas’

The IEA predicts that because of greater availability and climate concerns, the share of gas in the global energy mix will triple by 2035 to 1.6 trillion litres, or 25% of the global energy mix – a higher percentage than coal and second only to oil.

But the EU’s chief climate negotiator Artur Runge-Metzger has publicly questioned whether such heavy reliance on fossil fuels would allow the decarbonication by 2050 that scientists say is needed to limit global warming to two degrees Celsius.

‘Shale gas revolution’

To prevent the ‘shale gas revolution’ from sparking an atmospheric methane overdose – and public protests – the IEA recommends substantial operating changes by the industry.

Drilling sites should be chosen to minimise social and environmental impacts, they say, and environmental monitoring should be more extensively conducted and communicated to the public, at all stages of the drilling process.

A general performance standard for wells should be introduced involving robust rules on well design, construction, cementing and integrity that isolate gas bearing formations from other strata, particularly freshwater aquifers.

Minimum-depth limitations should be imposed on fracking, while earthquake risks should be carefully addressed through geological surveys and site choices, the IEA says.

Environmental concerns about the pollution of underground freshwater sources with industrial chemicals should also be taken more seriously.

Freshwater use should be reduced, chemical additives minimised, emergency response plans strengthened, and flaring of natural gas cut back massively, it adds.

No panaceas

But even with adoption of all these caveats, shale gas use cannot be a panacea, the IEA report warns.

“Greater reliance on natural gas alone cannot realise the international goal of limiting the long-term increase in the global mean temperature to two degrees Celsius,” it says.

As well as unconventional gas, energy efficiency, low carbon energy sources and technologies such as carbon capture and storage will all be needed, the report says.

Positions:

Reacting to the report, Greenpeace International's Chief Scientist Paul Johnston said: “Greenpeace opposes the exploitation of unconventional gas reserves because the impacts have not been fully investigated, understood, addressed and regulated. The impacts include high rates of methane leakage, severe water pollution and very high water consumption. The IEA report essentially affirms that these concerns are real but falls short of actually addressing them.”

Timeline:

30 May 2012: IEA launches 'Golden Rules for the Golden Age of Gas' report in the European Parliament (9.30am, room P7C050).

In attendance at the report's launch will be Fatih Birol, the IEA's chief economist, Boguslaw Sonik, Polish MEP, and Marie-Pierre Fauconnier, the director-general for energy in Belgium's federal ministry for energy. The launch event will take place under the patronage of Amalia Sartori MEP, who chairs the Parliament's Industry, Research and Energy Committee (ITRE).

Background

Shale gas is an 'unconventional' fossil fuel that is found within natural fissures and fractures underground. Until recently, no method of safely transporting it to the surface existed.

However, by pumping water, sand and chemicals into rock formations under high pressure via a technique known as hydraulic fracturing or 'fracking', energy companies believe they have found a part of the answer to Europe's energy security problems.

The method remains intensely controversial because of its possible environmental risks, including poisoning groundwater and higher greenhouse gas emissions than traditional gas.

To proponents, shale gas represents a hitherto untapped and welcome alternative energy source to traditional fossil fuels. At the moment the continent depends on gas imported from Russia, and disputes between that country and Ukraine have disrupted winter supplies in recent years.

In the US, shale gas already accounts for 16% of the world's largest economy natural gas production and some analysts predict that could rise to 50% within 20 years.